Unpacking Q3 Earnings: J. M. Smucker (NYSE:SJM) In The Context Of Other Shelf-Stable Food Stocks
As the craze of earnings season draws to a close, here’s a look back at some of the most exciting (and some less so) results from Q3. Today, we are looking at shelf-stable food stocks, starting with J. M. Smucker (NYSE:SJM).
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
The 21 shelf-stable food stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 5.7% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11.9% since the latest earnings results.
J. M. Smucker (NYSE:SJM)
Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.
J. M. Smucker reported revenues of $2.27 billion, up 17.2% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a solid beat of analysts’ EBITDA and organic revenue estimates.
J. M. Smucker Total Revenue
Unsurprisingly, the stock is down 11.2% since reporting and currently trades at $100.90.
Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.
General Mills reported revenues of $5.24 billion, up 2% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.
General Mills Total Revenue
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 11.7% since reporting. It currently trades at $58.21.
Best known for its Grown in Idaho brand, Lamb Weston (NYSE:LW) produces and distributes potato products such as frozen french fries and mashed potatoes.
Lamb Weston reported revenues of $1.60 billion, down 7.6% year on year, falling short of analysts’ expectations by 4.3%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.
Lamb Weston delivered the weakest performance against analyst estimates and weakest full-year guidance update in the group. As expected, the stock is down 22.3% since the results and currently trades at $60.73.
The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE:MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
McCormick reported revenues of $1.68 billion, flat year on year. This print beat analysts’ expectations by 0.8%. It was a strong quarter as it also logged an impressive beat of analysts’ EBITDA and EPS estimates.
The stock is down 13.3% since reporting and currently trades at $71.39.
Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Simply Good Foods reported revenues of $341.3 million, up 10.6% year on year. This result missed analysts’ expectations by 1.7%. Overall, it was a mixed quarter for the company.
The stock is down 4.8% since reporting and currently trades at $35.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
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